Regulator to accept a market solution
Years of uncertainty surrounding commission disclosure are set to end with an FSA announcement that it has accepted an industry-led solution.
The regulator is expected to announce next week that commission disclosure will not be made compulsory. The statement was originally due this week.
A market solution has been reached between trade bodies, including Biba and the ABI. Despite months of discussions, it is now believed the FSA will back the industry plan.
It is understood the requirements for disclosure will be different for different business models, but all firms will receive industry guidance on what information should be disclosed and at what point in a transaction it should be done.
Recent negotiations between the industry and the FSA have focused on whether brokers should have to verbally inform clients they have the right to ask how much commission they are earning. The FSA will make clear in its announcement that such disclosure will be required only in certain situations.
Discussions surrounding conflicts of interest and whether brokers owned by insurers should have to disclose their commissions were also thought to have been central to the FSA’s decision.
An FSA spokesman confirmed an announcement would be made before the end of the year but would not comment further.
The news that mandatory commission disclosure appears to have been thwarted will relieve many, especially small brokers.